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What is Uninsured and Underinsured Motorist Coverage?

Here's a news flash for you, insurance is complicated. Let me make one aspect of it a little bit less confusing by explaining a little bit about uninsured/underinsured motorist coverage.

Here in California, if an automobile insurer is writing you an insurance policy for your motor vehicle, they are required to offer you uninsured/underinsured motorist coverage. To know what you should do when you're offered this coverage, you really need to know what it is for. In the auto insurance business, and most lawyers, call such coverage by the initials, UM or UIM coverage and I will do so throughout the rest of this article.

Uninsured Motorist Coverage

Modern day UM/UIM coverage is offered as a package of combined coverage to provide insurance coverage for very similar circumstances. UM coverage is there to protect you, and your passengers, in the event that you are involved in a collision where the other driver that causes the collision has no insurance. That's simple enough to understand, but this UM coverage will also be there in the unfortunate event that the collision is caused by a hit and run driver. There is, however, a requirement for the UM coverage to apply in the event of a hit and run driver, and that is, there must be some sort of contact between the hit and run vehicle and something else, usually one of the vehicles involved in the collision, for the UM coverage to apply. The contact does not have to be major contact, but it must have occurred. Even a slight paint transfer is enough to establish contact. This requirement is put into place "to keep people honest," that is to say; to make sure that there was actually another vehicle that ran. Otherwise, someone who is not being diligent in their driving, and runs off the road into a tree, might later say that another car suddenly cut them off, forcing them into the tree. Something else that is important to know about UM/UIM coverage is that it will be there if you are injured in some sort of manner by an uninsured or underinsured vehicle even if you are not in a vehicle. For example, you've parked your car, and you and your son are struck by an uninsured car while you're walking across the parking lot toward the store. Your UM coverage would be there for you.

Underinsured Motorist Coverage

UIM coverage is very similar to UM coverage, but it applies when the driver of the vehicle at fault for the collision has auto insurance, but it isn't adequate or enough to fully compensate you or your passengers for the injuries suffered as a result of the collision. An example might go something like this, you are hit by an insured car, you are injured, and as a result, you have $18,000 in medical bills and missed enough time from work that you lost $3,000 in income. Now the other driver does have insurance, good, but he only has the minimum amount currently required under California law, bad. Bad, because the minimum amount of liability coverage currently required under California law is $15,000 per person with a maximum payout of $30,000 per accident. The most anyone person can receive under such a policy limit is $15,000! In our example, even though your medical bills are $18,000 and your lost income is $3,000 for a total in actual economic loss of $21,000, the most the at fault driver's insurance is obligated to pay you is $15,000. To protect against this type of injustice is the purpose of UIM coverage.

How much UM/UIM coverage do I need?

Now that you know what the UM/UIM coverage is for, the next question is, how much coverage do you need. Unfortunately, it is quite common for insurance agents to under sell the UM/UIM coverage. I have my own theory why this is, but have never had it actually confirmed, so I won't share my speculation except to say, UM/UIM coverage is a very inexpensive coverage to purchase, and this might have something to do with why it is undersold. At any rate the most coverage that you can purchase is up to the same amount as what your own liability coverage limits are. That is to say, if you have liability coverage of $100,000/$300,000 then the highest UM/UIM limits you could purchase are in the same amount. Now, I can't tell you how many times I've had clients that are carrying high liability limits, but only minimal or reduced coverage limits for their UM/UIM coverage. In a small collision, this is not so bad, but if their injuries are more severe and have more consequences, then they really could use and benefit from having the higher coverage limits. These are very unfortunate common occurrences. Don't let it happen to you. Please, learn the lesson by listening, and not from experiencing it.

I advise people to have as much coverage to protect themselves and their passengers, as they purchase to care for those that they might injure through their own negligence. And here's the good part, you will be surprised at how little your yearly premiums will go up by increasing your UM/UIM coverage! If there is such a thing as a bargain when it comes to motor vehicle insurance, UM/UIM coverage is it. Also, here in California, if you are submitting a UIM claim, your insurance company will get a credit toward your settlement for everything that you have collected from the insurance company for the at fault driver. What this means in practice for you is, your insurance company takes credit toward your settlement for what you've already collected, AND your UIM coverage is, in essence reduced for you by what you already collected.

Let me give an example to make this a little bit more clear. Let's say that the appropriate amount to fully compensate you for the harm and injury that you suffered in the collision is $40,000. You collected $15,000 from the other driver's insurance company, and you have $25,000 per person UM/UIM coverage. Your company gets a credit toward your policy limits of the $15,000 already collected, and would ONLY have to pay you $10,000 (your policy limits of $25,000 minus the $15,000 already collected.) Under this example, you would not receive the full and fair amount of compensation! Keep this in mind when considering how much UM/UIM coverage you want to purchase, as well as the fact that there are an alarming number of uninsured drivers on the road.

Do I need representation for an accident with a UM/UIM?

This brings us to the next question about UM/UIM situations. If you've found yourself in a UM/UIM situation, do you need a lawyer. The fact that the claim is a UM/UIM claim doesn't really change very much from a situation where the insurance company is that of the other driver. That is to say, if the injuries are significant enough and have enough bad effects on your life, the fact that the insurance company that will be dealt with is your insurance company doesn't change one very large fact, they're still an insurance company. And once the UM/UIM coverage situation arises, then your insurance company is allowed and will assert each and every defense that the driver of the at fault, uninsured vehicle, could assert.

They are, in essence, stepping into their shoes. They will then do what they can to minimize any payout to you. I suspect that the insurance companies would disagree with this last statement, but I've seen it, first hand, too many times over the course of my career for me to not stick to what I've just said. If you think insurance companies play fair, then by all means go ahead and represent yourself. If you haven't been living on the moon for the last few decades, then you'll know that you do need a lawyer, even if it is a UM/UIM situation.

To discuss your uninsured/unindersured motorist accident with a seasoned attorney, contact my firm, the Law Office of Gary D. Baughman, APC! As one of the leading catastrophic injury and wrongful death law firms in the entire state of California, we are well-equipped to handle your case, no matter how serious. Call 909.927.5359 to get started.